Patchy seasonal conditions across Australia temper initial optimism
Mixed seasonal conditions and economic pressures have led to a decline in the nation’s farm sector confidence, according to the latest Rabobank Rural Confidence Survey.
The recently released survey shows a downturn in sentiment among the country’s agricultural producers, with more farmers expecting a challenging year ahead than those with a positive outlook.
The second quarter survey marks a shift from the optimism seen at the start of the year, which was bolstered by better-than-expected summer rainfall and promising commodity markets. Farmers in the west and south have faced a very dry autumn, leading to late or absent “autumn breaks” for winter cropping. In contrast, Queensland and parts of New South Wales experienced plentiful rainfall.
Economic pressures are also impacting farm business bottom lines, with concerns over softer commodity prices and inflation driving up input costs.
Marcel van Doremaele (pictured above), Rabobank’s group executive for country banking Australia, noted that the “patchy” seasonal conditions across Australia during autumn have tempered the optimism that began the year. He also pointed out that recent late rainfall in many dry areas offers some relief, though parts of Victoria still need rain.
“Although confidence has come down from the high levels we’d seen at the beginning of the year, overall conditions in the agricultural sector are still good,” Van Doremaele said.
“There has been rainfall in many agricultural regions, setting up the planting conditions for the winter cropping season, while the potential of a La Nina developing in the second half of the year is holding additional promise.
“Commodity prices – while down from the very high levels seen a couple of years ago – are overall reasonable, for example in grain, dairy and cotton. Although farmgate milk prices will be lower in the season ahead, the dairy sector is still looking to a profitable year ahead and for beef producers, there is the outlook for stronger demand from the US coming through later in the year to provide some further price support.”
The new Rural Confidence Survey, conducted last month, also shows a decline in farmers expecting an improvement in the agricultural economy over the next 12 months, down to 15% from 31% in the previous quarter. Those expecting conditions to worsen increased to 36% from 16%, while 46% of respondents foresee stable conditions.
Van Doremaele highlighted that a late autumn break has particularly affected rural confidence in South Australia, Western Australia, and Victoria. Tasmanian farmers also faced below-average conditions with low rainfall through to the start of winter. New South Wales experienced more favourable conditions, though this varied across the state. Queensland enjoyed good seasonal conditions but faced a subdued cattle market impacting sentiment.
Drought and dry weather were the top concerns for 37% of farmers, followed by rising input costs (35%) and falling commodity prices (32%). Farmers also expressed concern over government policies and overseas market impacts.
Despite the challenges, 37% of farmers expect a good season ahead, and 28% anticipate rising commodity prices. Confidence levels are down across all states but remain higher in New South Wales and Queensland. Cotton is the only sector showing improved confidence.
Meanwhile, investment intentions among Australian farmers remain stable, with 21% planning to increase investment and 13% planning to decrease it. On-farm infrastructure, new technologies, and irrigation/water infrastructure are the top areas for planned investment.
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